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Unformatted text preview: Income elasticity of property tax less than equal to 1 Virtual cycle: If the city is able to develop reputation for an extraordinary school, it increases the demand for a housing to go to top quality school, Tax base go up, tax revenue go up and strengthen community. Local government provide: some transportation, security (police, fire, sanitation, schools, bus drivers) It is consistent. Biggest input? Human capital (Labor intensive) Limited technological change Balmers principle Output/Day Wage/Day Unit Labor Cost of producing these things 2 $100 $50 50%< >50% 3 $150 $50 2 $150 $75 Private Sector VS Public Sector (PICTURE) As the average wage goes up, you increase more wage for public sectors, but the productivity remains the same....
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- Spring '08
- Income Elasticity